Microsoft Shifts Some Work Out of Egypt

Egypt has been aggressively attracting tech companies to its wired office parks to help create jobs for its young, educated, and often English-speaking workforce. But by cutting off Internet access last week in the wake of civil unrest, Egypt's government demonstrated just how quickly it can unwind its high-tech goals.

Microsoft is among the 120 companies located in Cairo's Smart Villages , an office park created in 2003 to be Egypt's "prime" information technology park. It includes a health club, swimming pool, video conferencing services, a conference center and a pyramid-shaped restaurant called the "Think Tank Caf."

Egypt's move to block Internet access prompted Microsoft to respond. Asked about the situation in Egypt, Microsoft said in a written response to a query that it "is constantly assessing the impact of the unrest and Internet connection issues on our properties and services. What limited service the company as a whole provides to and through the region, mainly call-center service, has been largely distributed to other locations."

President Barack Obama and other administration officials are urging the Egyptian government to restore Internet services and see access as a human right. "It is our strong belief that inside of the framework of basic individual rights are the rights of those to have access to the Internet and to sites for open communication and social networking," White House Press Secretary Robert Gibbs said at a briefing Friday.

Egypt's decision to cut Internet access was apparently intended to disrupt the ability of protestors to use social networks to organize. But high-tech companies have similar flip-the-switch abilities and can shift services in response to a natural or man-made disaster. It is almost certain that tech companies in Egypt will respond to the current uncertainty much the same way Microsoft did -- if they haven't already.

Phil Fersht, the CEO and head of research at Horses for Sources, an outsourcing research and advisory firm, said top-tier providers rely on Egyptian resources largely for call center work and software support and development. For these firms "it's a massive, massive concern when the government shuts off the internet and all hell is breaking loose," he said in an e-mailed response to questions.

"Egypt has proven capable as a good quality resource location for the Middle East, Africa and European regions in areas such as IT, BPO and call center services and has invested significantly in promoting its capabilities worldwide," said Fersht. "The country has invested millions to promote its capabilities -- and now that investment is looking under threat."

Not surprisingly, the government agency responsible for high-tech development in Egypt, the Information Technology Industry Development Agency, (ITIDA), has been offline. Efforts to reach officials by telephone, e-mail or through a Facebook account have been unsuccessful.

Fersht suggested that the current problems in Egypt could prompt high-tech firms to re-think the risks they face in other regions.

"If situations, such as what is currently happening in Egypt, proliferate to other countries with sourcing support services, the first reaction of governments now seems to be to 'shut off the Internet,'" said Fersht, "You have to question how this impacts ITO/BPO services that are hugely reliant on the Internet to succeed.

"The Egypt situation is a serious blow to many of the developing nations seeking to take their share of global services [that] have potentially questionable political stability," said Fersht.

Smart Villages said that by the end of 2009 there were 28,000 professionals working at various companies in the office, and that by 2014 it expected that more than 100,000 would be working at some 500 companies. Microsoft is one of numerous tech firms with a presence in Egypt's Smart Villages high-tech park.

Patrick Thibodeau covers SaaS and enterprise applications, outsourcing, government IT policies, data centers and IT workforce issues for Computerworld. Follow Patrick on Twitter at @DCgov or subscribe to Patrick's RSS feed . His e-mail address is pthibodeau@computerworld.com .